In response to the economic fallout of the COVID-19 pandemic, the CARES Act required states to allow applicants to self-certify their employment history and unemployment benefit eligibility. Therefore, in an effort to process the record number for fraudulent unemployment claims, many states chose to drop normal fraud detection efforts, resulting in payment of a record number of fraudulent claims, unfortunately. A problem which states couldn’t dig themselves out of, therefore keeping minimal fraud detection as the status quo. In 2021, a California State Auditor reported that California’s Employment Development Department was allowing claimants to continue to collect benefits using suspicious addresses because it had not established prior payment blocks for their claims. As an employee of the Employment Development Department of California, not only did Phyllis Hope Stitts see suspicious claims being processed, she saw her own fraudulent claims being processed.
Stitts’ job duties included determining claimant eligibility for unemployment benefits and processing claims. Within this capacity, Stitts had acquired the names of 10 individuals, including their dates of birth, Social Security numbers, and other identifying information to be used in an unemployment benefit scheme. None of these individuals were eligible to receive benefits. Some of them were even deceased.
Using these names, Stitts submitted false information indicating that these claimants had worked in California, had become unemployed due to the pandemic, and were entitled to benefits. She also provided the EDD with phony employment histories and driver’s license information for the claimants. Stitts fraudulently obtained more than $768,000 in unemployment benefits before a colleague in the EDD department became suspicious.
On January 10, 2025, Stitt pleaded guilty to unemployment insurance fraud.
Great job by the Department of Labor’s Office of Inspector General in this case.
Today’s Fraud of The Day is based on article “Former EDD employee admits filing pandemic-related claims for dead people in $768,000 fraud” published by the Los Angeles Daily News on January 10, 2025.
A former California Employment Development Department employee admitted this week in federal court to fraudulently obtaining more than $768,000 in COVID-19 unemployment payments for dead people and unsuspecting, ineligible claimants.
Phyllis Hope Stitt, 61, of Carson pleaded guilty Wednesday, Jan. 8, to one count of conspiracy to commit mail fraud and bank fraud for filing at least 29 phony unemployment insurance claims. Stitt’s former boyfriend — Kenneth Earl Riley, 64, of South Los Angeles — pleaded guilty to the same charge. Stitt and Riley face a maximum of 30 years in prison when they are sentenced on May 9.